Crisis in Brazilian Sugarcane Industry with Closures and Redundancies

07/14/2015 - 09h21

The pessimistic predictions of the Brazilian sugarcane industry for 2015/16 appear to be coming true, with plant closures, redundancies and requests for judicial recovery.

This is down to several factors, including the ongoing crisis in the Brazilian economy, the excess of sugar on global markets and production costs which are exceeding sales values.

In Sertãozinho, in the northwest of São Paulo state, the Albertina plant has been declared bankrupt after six years of judicial recovery, while the Ibirá plant has suspended its activities.

In the Triângulo Mineiro (in the west of Minas Gerais), two other plants have closed, with another suspending activities. Meanwhile, in Rio Verde, in Goiás, another plant has filed for judicial recovery.

One of the reasons for the crisis, according to managers consulted by Folha and industry specialists, is the low profits currently offered by sugar and ethanol, when compared to labor costs which have been rising at nearly 10% a year. This has drained the sector of financial resources.

For this harvest, markets predict that a tonne of sugarcane will cost between R$87 (USD$27.69) and R$90 (USD$28.64) to produce, while the plants will only make around R$70 (USD$22.28) from its sale.

The sector predicts that around ten plants will suspend their activities during the current harvest. Since 2008, there have been 50 such suspensions, with 370 in total.

In Sertãozinho, the crisis has hit the industry hard, with nearly 3000 redundancies since 2014. The city has 650 factories, 90% of which produce machinery used in the sugarcane plants.

Translated by TOM GATEHOUSE

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	Joel Silva/Folhapress
	In Sertãozinho, in the northeast of São Paulo state, the Albertina plant has been declared bankrupt